British engineering giant Smiths this evening announced that it would sell its medical division to US private equity firm TA Associates for $2.3bn (£1.7bn).
Under the deal, the FTSE 100 firm could be in line for a $200m windfall depending on how Smiths Medical performs in the future.
The acquisition is just the latest in a flurry of private equity deals taking listed firms private amid prime buyout conditions.
It comes the same day that fellow engineer Meggitt said that it had agreed to a £6.6bn takeover deal by Parker-Hannifin.
Smiths board has unilaterally approved the offer, which it says could realise $1.8bn in cash proceeds on completion.
It added that there would be a “significant return” of cash to shareholders after the sale, which it has long been trying to pull off.
The blue chip stock will retain a 30 per cent stake in the spun-off division, which makes specialty devices for infusion therapy, vascular access and vital care.
It said that the deal would allow it to focus on its core operations, which centre around the manufacture of sensors for the detection of explosives, weapons, chemical agents.
Jehan Zeb Noor, chief executive of Smiths Medical, said: “Our new ownership structure presents a great opportunity for Smiths Medical, our employees and our customers.
“We are looking forward to working with TA who have been an active investor in the healthcare industry for more than 30 years and who can help us accelerate our growth, create value for our customers and, most importantly, improve the lives of millions of patients globally.”
Birker Bahnsen, managing director of TA Associates, said: We believe that TA is well-positioned as a growth investor to support Smiths Medical in driving innovation and value going forward.
“Our deep medical device experience, operational knowledge and strong track record of partnering with management teams to accelerate growth, give us conﬁdence that we can help Smiths Medical grow both organically and through acquisitions.”